What Bankers Want (and Don't Want) from President Trump

November 14, 2016 7:30 AM

Optimism is running high in banking after the presidential election, as many bankers see Donald Trump's promises to lower corporate taxes and weaken regulations as potential boons for the economy and their bottom lines. Others, though, doubt Trump would push through or even endorse meaningful regulatory reform and are wary of his protectionist rhetoric. Here's what some bankers have to say to the president-elect.

End Government Overreach

"One of the things Trump can do most to boost the economy is to give us back our ability to make decisions in the banking business and not be dictated by a bunch of bureaucrats in Washington, D.C.," said Dennis Nixon, chairman of the $11.7 billion-asset International Bancshares in Laredo, Texas.

"There's just massive overreach by the government, and it's slowing our economy. We just don't have enough flexibility in our system to make free enterprise prosper."

Help Small Businesses

Dan Blanton, CEO of the $1.9 billion-asset Southeast Bank Financial in Augusta, Ga., said that even small businesses that are doing well are reluctant to borrow because of costs related to the Affordable Care Act and other government mandates. "Our bank's loan-to-deposit ratio is as low as it's ever been. It's in the 50% to 60% [range] where we used to operate at 80%," he said. "We have a good economy and we have the money to lend, but we can't find customers that want to borrow for fear of more regulations and costs being piled on them."

Slash Corporate Tax Rate

"Our little bank pays 40% in income tax," said McCall Wilson, president and CEO of the $443 million-asset Bank of Fayette Country in Tennessee. "Four dollars out of every 10 we make goes back to the government. You reduce that to three out of 10 or two and one-half out of 10, and you know what I'm going to do with that money? I'm either going to build a new branch and hire seven people to run it, or pay a dividend to the shareholders, and they'll spend it on something like a new house, new car or new furniture."

Ease Restrictions on Raising Capital

Both McCall Wilson and Centric Financial's Patti Husic are hopeful that a Trump administration will tweak securities rules to make it easier and less costly for small banks to raise capital. "The definition of accredited investor has changed, and that has made the pond [for accessing capital] smaller and smaller," said Husic, whose $464 billion-asset bank is based in Harrisburg, Pa. Banks "need access to capital to do what we do best: help small businesses grow."

Invest in Infrastructure, Affordable Housing

Keith Mestrich, the CEO at the $4 billion-asset Amalgamated Bank in New York, very publicly endorsed Hillary Clinton for president, but he said "the issues haven't changed" with Trump's victory. "The country needs continued economic stimulus, [investments in] infrastructure," he said. "Income inequality needs to be addressed. [Affordable] housing remains an incredible crisis. There are a lot of people who feel left out of this economy."

Stop the Protectionist Talk

Trump has vowed to renegotiate or even pull out of trade agreements that he believes have hurt American workers and that alarms some bankers. "Trade has led to a lower cost of goods and services here. If he goes about erecting [a trade] barrier, we'll end up creating a recession," said Chris Murphy, chairman and CEO of the $5 billion-asset 1st Source Bank in South Bend, Ind. Added Bob Steen (pictured), the CEO of the $85 million-asset Bridge Community Bank in Mechanicsville, Iowa: "Our efforts, as flawed as they are for free trade, have served our agricultural market pretty well, whether our producers agree or not. That concerns me."

Invest in Retraining Workers

Trump has also promised to bring back manufacturing jobs lost to global trade, but the problem is technology has made many jobs obsolete. "Technology has been the biggest change in how we do business," said 1st Source's Murphy. "People need to be educated to deal in a world that's technology-oriented. We owe it to those people who have been displaced."